The Export Sector in Ecuador Historic Evolution and Perspectives Juan Pablo Cuesta

General Background Pop. (2010): 14,306,876 GDP Per Capita (PPP): 2720 (1980). 8,027 (2010). HDI: (1980) (2012). Poverty Rates (2010) ▫At $1.25 a day (PPP): 4.6% ▫At national poverty line: 32.8% Dollarized economy since 2000.

Export Structure Exports by group of products (average 2001 – 2010): ▫Primary products  76% ▫Manufactured  24% Exports by destination country ▫United States  35% ▫European Union  13% ▫Panama  12 % ▫Peru  8% ▫Venezuela  6% Source: World Trade OrganizationSource: Central Bank of Ecuador

Source: US Energy Information Administration Oil Dependency Source: Central Bank of Ecuador

Oil Dependency Dutch Disease? ▫Increase in exploitation of natural resources and decline in the manufacturing sector. IMF Working Paper by Kareem Ismail Apr-2010: ▫Permanent increases in oil price negatively impact output in manufacturing. ▫Oil windfall shocks have a stronger impact on manufacturing sectors in countries with more open capital markets to foreign investment.

Trade Agreements Comunidad Andina de Naciones (CAN) UNASUR (associate member) Andean Trade Promotion and Drug Eradication Act (ATPDEA) - Expired Feb-2011

Perspectives Oil production to be maintained in the short term but decline over the years if new oil fields are not discovered or exploited (Yasuni ITT). No clear policies towards fostering the non-oil exports, especially the manufacturing export sector. Government has adopted an anti “Free Trade Agreements” stand against developed countries. Need to maintain and strengthen exports to preserve dollarization.

Recommendations Reduce dependency on oil. ▫Incentive agro-industry, services (tourism), non- traditional manufacturing  Training, capacity building, credit. Diversify trade partners but do not neglect the current. Seek trade agreements. Bring exporting industry in, not lead them out.

References World Bank, World Development Indicators. Website: Accessed on Apr World Trade Organization, Trade Profiles Website: les11_e.pdf. Accessed on Apr les11_e.pdf Banco Central del Ecuador. Website: Accessed on Apr US Energy Information Administration. Website: =53&aid=1. Apr =53&aid=1 IMF Working Paper: “The Structural Manifestation of the `Dutch Disease’: The Case of Oil Exporting Countries. Website: tch%20Disease%20(IMF)%20Newest%20Version.pdf. Accessed on Apr tch%20Disease%20(IMF)%20Newest%20Version.pdf